{ "key_pair_value_system": true, "answer_rating_count": "", "question_feedback_html": { "html_star": "", "html_star_feedback": "" }, "answer_average_rating_value": "", "answer_date_js": "2024-06-29T01:01:47-04:00", "answer_date": "2024-06-29 01:01:47", "is_docs_available": null, "is_excel_available": null, "is_pdf_available": null, "count_file_available": 0, "main_page": "student_question_view", "question_id": "4434314", "url": "\/study-help\/questions\/dallas-software-is-an-allequity-financed-publiclytraded-software-company-it-4434314", "question_creation_date_js": "2024-06-29T01:01:47-04:00", "question_creation_date": "Jun 29, 2024 01:01 AM", "meta_title": "[Solved] Dallas Software is an all-equity financed | SolutionInn", "meta_description": "Answer of - Dallas Software is an all-equity financed, publicly-traded software company. It is generating cash flow exceeding its | SolutionInn", "meta_keywords": "dallas,software,-equity,financed,publicly-traded,company,generating,cash,flow,exceeding,investment,ceo", "question_title_h1": "Dallas Software is an all-equity financed, publicly-traded software company. It is generating cash flow exceeding its investment needs. The CEO of the company proposes using", "question_title": "Dallas Software is an all-equity financed, publicly-traded software company. It is generating", "question_title_for_js_snippet": "Dallas Software is an all equity financed, publicly traded software company It is generating cash flow exceeding its investment needs The CEO of the company proposes using the excess cash to buy a publicly traded restaurant chain The CEO argues that We are generating more cash than we need, so we have free cash, and we should invest it in something, even if the returns to that investment are less than our cost of capital In addition, we would diversify away a lot of our cash flow risk since the cash flows from the software and restaurant businesses are largely uncorrelated, and this diversification will make our shareholders happy Does each of the CEO's two arguments make sense Assume that there are no tax considerations here ", "question_description": "

Dallas Software is an all-equity financed, publicly-traded software company. It is generating cash flow exceeding its investment needs. The CEO of the company proposes using the excess cash to buy a publicly-traded restaurant chain. The CEO argues that \"We are generating more cash than we need, so we have free cash, and we should invest it in something, even if the returns to that investment are less than our cost of capital. In addition, we would diversify away a lot of our cash flow risk since the cash flows from the software and restaurant businesses are largely uncorrelated, and this diversification will make our shareholders happy.\" Does each of the CEO's two arguments make sense? Assume that there are no tax considerations here.<\/p>", "transcribed_text": "", "related_book": { "title": "Intermediate Accounting", "isbn": "470964731, 978-0470964736, 978-0470161012", "edition": "9th Canadian Edition, Volume 2", "authors": "Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield.", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/516.jpg", "uri": "\/textbooks\/intermediate-accounting-9th-canadian-edition-volume-2-516", "see_more_uri": "" }, "free_related_book": { "isbn": "1349115649", "uri": "\/textbooks\/labour-relations-and-economic-performance-1st-edition-9781349115648", "name": "Labour Relations And Economic Performance", "edition": "1st Edition" }, "question_posted": "2024-06-29 01:01:47", "see_more_questions_link": "\/study-help\/questions\/business-finance-2024-September-13", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/a-bat-is-flitting-about-in-a-cave-navigating-via", "description": "A bat is flitting about in a cave, navigating via ultrasonic bleeps. Assume that the sound emission frequency of the bat is 39 000 Hz. 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Instead of selecting the 100 total participants from the...", "stars": 3 } ], "next_back_navigation": { "previous": "\/study-help\/questions\/santana-rey-expects-sales-of-business-solutions-line-of-computer-4434313", "next": "\/study-help\/questions\/simulation-1-game-of-monopoly-play-the-game-of-4434315" }, "breadcrumbs": [ { "name": "Study help", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers" }, { "name": "Business", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers\/business" }, { "name": "Accounting", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/business-accounting" }, { "name": "Dallas Software is an all-equity financed, publicly-traded software company. 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